The Amazon Strategy Story

In case you’ve never heard of Amazon, they’re an American multinational technology company focused on online shopping, third-party seller services, web services, digital content, autonomous driving, and AI among many, many other things. They’ve also grown to be “one of the most influential economic and cultural forces in the world."

After studying electrical engineering and computer science at Princeton University, Jeff Bezos graduated summa cum laude in 1986 and proceeded to work a series of jobs on Wall Street. In 1990, he found his way to investment bank D.E. Shaw & Co. as a hedge fund manager and quickly worked his way up to senior vice president in charge of evaluating the investment opportunities of the internet. 

It was here that he noticed that internet usage was growing at a rate of 2,300% per year during the spring of 1994. Seeing an unprecedented opportunity, Bezos began looking for a business model that could capitalize on this increasingly popular technology. 

Bezos Launches Online Bookstore

In considering products he could launch an online business around, Bezos settled on books due to the relatively low cost of books, the vast number of titles already published, and the massive demand for books all over the world. 

After raising what is estimated to be around $300,000 from his parents, Bezos quit his job and moved to Bellevue, Washington to launch Amazon, one of the first online bookstores. 

Amazon began in Bezos' garage, starting with just a handful of programmers in the summer of 1994. Opening for business early the next year, Amazon sold its first book, "Fluid Concepts And Creative Analogies: Computer Models Of The Fundamental Mechanisms Of Thought" by Douglas Hofstadter, on July 16, 1995.

The exponential growth of the internet in the mid-1990s allowed the young internet company to grow quickly. It wasn’t long before the online bookseller began expanding outside of books and into other areas, as well as introducing other services such as free shipping on some orders.

‘The Everything Store’

By August of 1998, Amazon’s ecommerce platform began to expand beyond just selling books with the addition of CDs, toys, and electronics. The company soon expanded into other products as well and eventually added memberships and other services like free Super Saver Shipping on purchases over $99. 

In 2000, Amazon opened up its platform to third-party sellers, allowing businesses of all sizes to begin selling on Amazon’s ecommerce site. With the incorporation of third-party sellers also came third-party seller services, Amazon’s second biggest revenue category today.

By 2005, Amazon began offering its Prime Membership, providing free shipping to Amazon Prime members on any purchase over $35. Then, in 2006, Amazon began offering Fulfillment by Amazon (FBA), allowing small businesses to use Amazon's customer service and order fulfillment in selling to Amazon customers. 

Over time, the Amazon.com Marketplace has grown into "The Everything Store," where online shoppers can find just about anything imaginable. And they do — Amazon’s global marketplace revenue surpassed $222.08 billion in 2021.

Amazon began moving beyond ecommerce shortly after its IPO with the acquisition of IMDb (Internet Movie Database) in 1998. Since then, Amazon has taken on an approach where they invest in innovation and technology on their own as well as rely on an aggressive mergers and acquisition strategy to fuel growth, acquiring 113 companies through August 2022 and investing in many more across numerous industries.

Some of the adjacent moves Amazon has made to build their ecommerce website into a full fledge platform business include:

• Amazon Third-Party Seller Services
• Amazon Web Services
• Advertising
• Subscriptions
• Physical Stores
• Other Amazon Products, Services, and Subsidiaries

And after more than 25 years since its first sale, Amazon still manages to find opportunities for exponential growth. In fact, Amazon’s total revenue exceeded $469 billion in 2021, larger than the entire economic output of many countries.

Amazon began allowing third parties to sell on Amazon’s ecommerce website way back in the year 2000, charging a commission to sellers for each item sold. Since then, Amazon’s third-party seller services have grown to include warehousing, fulfillment, and shipping fees, in addition to other services for Amazon sellers.

Not surprisingly, Amazon’s Third-Party Seller Services is the company’s second-largest source of revenue behind its first-party ecommerce sales, providing 22%, or $103.4 billion, of Amazon’s revenue.

In 2006, Amazon moved into cloud computing with Amazon Web Services and their Amazon Simple Storage Service (Amazon S3), allowing other companies and developers to use storage space on Amazon servers.

Since that time Amazon Web Services has grown into an industry-leading company in cloud computing, offering everything from application hosting and backup and storage to databases and enterprise IT. In fact, AWS offers over 200 products and services, including storage, application integration, databases, computing, management and government, analytics, network and content delivery, and more.

Amazon Web Services has grown to represent Amazon’s third largest source of revenue, generating $62.2 billion — approximately 13% of Amazon’s more than $469.8 billion revenue in 2021.

Amazon launched the advertising arm of its business in 2012 with the creation of Amazon Media Group (AMG), Amazon Marketing Services (AMS), and Amazon Advertising Platform (AAP). Together, these tools provided sellers with access to pay-per-click ads such as banner ads and highlighted search ads to its more than 180 million users at the time. 

Amazon’s advertising arm accounted for $31.2 billion in revenue in 2021, accounting for nearly 7% of company-wide revenue. Midway through 2022, Amazon’s advertising revenue is on pace to grow nearly 20% year-over-year.

Amazon entered the subscription business in 2005 with the introduction of Amazon Prime, an annual membership that offered free two-day shipping for members for a yearly fee of $79.99.

Amazon’s subscription-based businesses have branched out from Amazon Prime into digital and streaming video, music, ebooks, audiobooks, and more, including:

• Amazon Prime
• Streaming Video
• Streaming Music

Amazon Prime

Amazon began offering its membership-based subscription known as Amazon Prime in the United States in 2005. Amazon Prime offered free two-day shipping, discounted one-day shipping, and several other benefits for members for an annual fee of $79.

Two years after rolling out Amazon Prime in the US, Amazon began introducing the program across the globe- first in Germany (2007), Japan (2007), and the UK (2007), followed by France (2008), Italy (2011), Canada (2013), and India (2016). 

In 2011, Amazon rebranded its streaming video service as Amazon Prime Instant Video and gave Prime members access to more than 5,000 movies and shows for free with the Amazon Prime subscription.

By 2014, Amazon had added Prime Music and Prime Photos (photo storage) as Prime member benefits, and in 2016, Amazon subsidiary Twitch began offering benefits for Prime members.

In 2016, Amazon also made Prime available as a monthly membership, making it more accessible than ever to their ever-increasing service area and customer base. Today, Amazon Prime has more than 200 million subscribers in 24 countries worldwide.

Streaming Video

Amazon also entered the online video space in 2006 with Amazon Unbox. Amazon Unbox, also known as Amazon Unbox Video Downloads, allowed users to download and watch digital copies of their favorite TV shows and movies.

At launch, Unbox offered more than 1,400 movies and TV shows users could rent or purchase and download. Unfortunately for Amazon, Unbox failed to gain much traction in the market despite a growing library of movies and shows. 

In 2008, Amazon rebranded Unbox as Amazon Video on Demand as it continued expanding its content library. By the end of 2008, Amazon Video on Demand had amassed a library of over 15,000 movies and 1,200 seasons of TV shows. 

In 2011, Amazon rebranded Amazon Video on Demand to Amazon Instant Video and began offering its Amazon Prime Members free access to over 5,000 movies and TV shows in a service dubbed Amazon Prime Instant Video. This marked a change in Amazon’s video service business model with its entry into the subscription video content industry and two distinct video services.

As the popularity of streaming grew, Amazon dropped “instant” from its rental and subscription video services, rebranding simply as Amazon Video and Amazon Prime Video in 2015. 

Three years later, Amazon again simplified the name for its video service, dropping the “Amazon” to rebrand its subscription video services as Prime Video and its rental and retail services as Prime Video Direct in 2018.

Streaming Music, Books, and More

Amazon also operates several other subscription-based services, many of which are offered for free as a part of Amazon Prime and can be upgraded to full suites of entertainment products and services. 

While Prime Music, Amazon’s free streaming service for its Prime members, offers a limited catalog of free music, Amazon also offers a much more extensive library of streaming music through its Amazon Music Unlimited. 

Amazon Music Unlimited is a subscription-based streaming music service similar to Pandora, Spotify, and other streaming services. Prime members can even save on a subscription; however, Amazon’s Music Unlimited pricing model is similar to its competitors.

In addition to music, Amazon also offers subscription services on books and audiobooks through services like Kindle Unlimited, Prime Reading, and Audible.

Amazon has also strayed further into the subscription empire with its subscription gaming services, including the acquisition of Twitch in 2014 and the recent launch of its own streaming gaming service Amazon Luna in 2020. 

All told, Amazon’s subscription businesses accounted for $31.77 billion in revenue in 2021 — nearly 7% of the company’s annual revenue.

Amazon has been experimenting with physical stores since 2014, when it launched its first pop-up shop featuring Amazon products in San Francisco. Since then, several Amazon store concepts have come and gone, Amazon made a huge retail acquisition, and the company is still working on developing physical retail concepts. Some of these include:

• Amazon Pop-Up Stores
• Amazon Books
• Amazon 4-Star Stores
• Amazon Go
• Whole Foods Market
• Amazon Fresh
• Amazon Style

Amazon Pop-Up

Amazon began experimenting with physical retail in 2014 with its first pop-up shop in the Westfield Mall in San Francisco. The original Amazon Pop-Up store, a kiosk-type location, focused on selling Amazon products like the Kindle and its newly launched Echo device. 

Early Amazon Pop-Up stores acted not only as a way to increase awareness of their new products but also to collect critical customer feedback. Over time, Amazon moved away from focusing on its own devices and began to launch themed pop-up stores. From 2015 through 2018, Amazon Pop-Up Stores began appearing in malls, Kohl’s stores, and Whole Foods Markets across the country, operating 87 stores by early 2019.

However, in March 2019, Amazon announced that they were closing all 87 of its Pop-Up stores across the US and UK. But, in another change of course, Amazon decided to bring back a number of its Pop-Up stores, opening several locations through 2021. 

Amazon Books

Committed to increasing its presence in physical retail, Amazon again expanded its online presence to brick-and-mortar in 2015 with the opening of its first retail store, Amazon Books. The first Amazon Books opened in the University Village shopping center in Amazon’s hometown of Seattle, Washington, on November 2, 2015.

Amazon Book Stores, selling primarily books and Amazon devices, operated like most traditional bookstores, with the added benefit of help from its troves of data on customer reviews and which books are popular and trending in determining what books to stock. Over the next several years, Amazon grew its Amazon Books stores, operating 24 stores in cities across the US by 2022.

Amazon 4-Star Store

Amazon again expanded its physical retail presence with the launch of its Amazon 4-Star Store concept in New York City in 2018. The Amazon 4-Star Store provided customers a way to bring their online Amazon shopping offline- offering highly rated household items, electronics and small appliances, toys, and other trending products in that area. 

By late 2021, Amazon had opened 40 Amazon 4-Star Stores in the US and UK. However, the company announced in March 2022 that it would close all of its Pop-Up, Amazon Books, and Amazon 4-Star Stores to focus on its grocery and convenience retail outlets.

Amazon Go

Amazon’s next venture into retail came in 2018 when it opened its concept convenience store Amazon Go, a fully automated store with no cashiers. 

In Amazon Go stores, everything is completely automated, including check out and payment, where cameras and sensors are used to track items and add them to the shopper’s virtual cart. Amazon Go customers can track and pay for their purchases in their Amazon Go app, which is required to even get into the store. 

As of 2022, Amazon has opened 42 Amazon Go stores in the US and the UK, concentrated in Seattle, Chicago, Los Angeles, New York City, and London.

Whole Foods Market

Amazon cemented its retail presence with the acquisition of Whole Foods Market for $13.7 billion in August 2017. The first Whole Foods Market was opened in Austin, Texas, in 1980 and expanded throughout Texas and the southern US over the next decade. 

By 2016, Whole Foods Market had expanded to more than 400 stores. However, facing declining sales in 2016 and 2017, Whole Foods was acquired by Amazon in August 2017 for $13.7 billion. This provided Amazon with its first major foothold in the physical retail space.

Amazon Fresh

Amazon began experimenting with a physical space with Amazon Fresh in 2017 with the opening of Amazon Fresh Pickup, which allowed customers to order their groceries online and pick them up at a designated time. 

In 2020, Amazon announced that Amazon Fresh would also expand into the physical grocer business, opening stores in Los Angeles and Chicago in the fall of 2020. Since then, Amazon has opened 38 Amazon Fresh grocery stores across the US.

Amazon Style

Amazon’s latest venture into the retail world is a fashion-focused clothing store branded Amazon Style. Amazon Style, which opened its first store in Los Angeles in 2022, provides a number of ways to shop for, buy, and return men's and women’s clothing, shoes, and accessories.

Amazon has also invested in a number of other products, services, and subsidiaries, both within and outside of the Amazon ecommerce platform. Some of Amazon’s other products, services, and subsidiaries include:

Private Label Brands

Another strategy that Amazon seems to be successfully deploying is launching and growing its own private label brands. Amazon began private label branding with its own private-label Pinzon products in 2005 and officially launched its Pinzon and AmazonBasics brands in 2009. 

Since then, it has launched more than 100 private label brands of its own and has helped launch hundreds and hundreds more through its Amazon Accelerator program, where Amazon provides support and resources to startups and small businesses and features their products in exchange for the exclusive rights to sell their products and an additional cut of the revenue.

Now, you are probably wondering, how does private label branding work? Private label branding is when a distributor or retailer contracts with a manufacturer to produce and label products exclusively for their brand. Private label products are typically produced with the distributor or retailer's logos, labels, and inserts (or those of a brand owned by the seller) on the package and materials. 

What Are Amazon’s Private Label Brands?

Amazon private label brands include products across hundreds of product categories. For example, look at AmazonBasics. AmazonBasics includes more than 2,000 products across dozens of product categories from pencils to electronics to furniture.

Like Amazon Basics, many of Amazon’s private label brands are known Amazon brands. For example, Kindle, Echo, and Alexa are advertised as Amazon’s products, as are Amazon Collection, Amazon Elements, Amazon Essentials, Amazon Fire, Amazon Fire TV, Amazon Fresh, and 365 Everyday Value.

However, it hasn’t always been common knowledge that Amazon owns so many of the brands featured on their site, including:

While Amazon has recently started disclosing many brands as an “Amazon Brand” on the Amazon Marketplace, there is no way to know just how many brands Amazon owns.

There are also several private label brands that Amazon is suspected of owning through subsidiaries or having invested in through the Amazon Accelerator. Many of these brands are listed as “Exclusively on Amazon.” For example, a number of companies in Delaware have registered trademarks for brands that only sell products on Amazon and cannot be found anywhere else on the internet. 

All of these companies' trademark applications have been filed by the same attorney who has filed trademark applications for many of Amazon’s own trademarks, and every company lists the same registered agent service in Wilmington. Many of these brands are suspected to be owned by Amazon or invested in through the Amazon Accelerator, including but not limited to:

Crowdsourcing Marketplace

Amazon introduced its crowdsourcing marketplace, Amazon Mechanical Turk, in November 2005 as a way to connect companies and individuals seeking to outsource virtual tasks and microtasks to a virtual freelance workforce.

Job requesters on MTurk may post “jobs" for various tasks, such as researching data details, simple data validation tasks, transcribing audio recordings, or participation in marketing and research surveys.

Payment Processing

Amazon Pay is Amazon’s digital wallet and payment network. Amazon launched Amazon Pay in 2007 as its online payment processing solution. Amazon Pay allows merchants to offer and consumers to pay for goods, services, and even donations on third-party websites, in mobile apps, and through Alexa using any of the payment methods connected to their Amazon accounts.

Amazon Pay includes a full range of services for merchants that provide customers the ability to pay through their Amazon accounts. Merchants can customize payments, shipping, fees, taxes, and returns, all facilitated by Amazon, while customers can keep their private information secure from third-party merchants and websites they don’t necessarily trust.

Publishing

Amazon first tested the publishing space in 1999 by leasing the rights to Weathervane, a defunct publishing imprint. Weathervane released a handful of books around Christmastime in 1999, including a Christmas recipe book. All of the Weathervane books were poorly received, and the imprint closed down.

It took Amazon another seven years to return to the publishing space with Kindle Direct Publishing, a publishing imprint launched in 2007 to release digital books on Amazon’s newly released Kindle ereader.

Two years later, in 2009, Amazon officially launched Amazon Publishing, the company’s publishing arm, and launched or acquired more than 15 imprints that Amazon operates today.

• July 1994: The company that would become Amazon incorporates as Cadabra.
• April 1995: Amazon.com website launched as an online bookstore.
• May 1997: Amazon goes public with an IPO valued at $18 per share, or a market value of $438 million.
• May 1998: Amazon acquires movie database website IMBd for $55 million.
• Aug. 1998: Amazon expands beyond books.
• November 2000: Amazon opens its marketplace to third-party sellers.
• January 2002: Amazon introduces Free Super Saver Shipping on orders over $99.
• February 2005: Amazon introduces its subscription membership service, Amazon Prime.
• November 2005: Amazon launches crowdsourcing marketplace Amazon Mechanical Turk.
• August 2006: Amazon launches its first cloud computing service, Amazon Elastic Compute Cloud (Amazon EC2).
• September 2006: Amazon launches Amazon Unbox, marking its entrance into online video.
• September 2006: Amazon launches warehousing and fulfillment service Fulfillment by Amazon.
• March 2007: Amazon launches its data storage solution, Amazon Simple Storage Service (Amazon S3).
• August 2007: Amazon launches grocery delivery service Amazon Fresh in select cities.
• August 2007: Amazon launches online payment solution, Pay with Amazon.
• September 2007: Amazon launches its streaming music service, Amazon Music.
• November 2007: Amazon launches its portable e-reader the Amazon Kindle.
• January 2008: Amazon acquires audible book company Audible for $300 million.
• May 2009: Amazon launches its first publishing imprint under what will become Amazon Publishing.
• July 2009: Amazon acquires online shoe retailer Zappos for $850 million.
• March 2012: Amazon acquires warehouse robotics company Kiva Systems for $775 million.
• October 2012: Amazon launches their advertising arm with Amazon Media Group (AMG), Amazon Marketing Services (AMS), and Amazon Advertising Platform (AAP). 
• March 2013: Amazon acquires social reading site Goodreads for $150 million.
• August 2014: Amazon introduces the Amazon Fire product line.
• August 2014: Amazon acquires video game streaming site Twitch for $970 million.
• September 2014: Amazon opens its first Pop-Up Store in the Westfield Mall in San Francisco, CA.
• November 2014: Amazon introduces the Amazon Echo product line.
• November 2014: Amazon opens Amazon Books, its first permanent brick-and mortar store.
• June 2017: Amazon acquires grocery store chain Whole Food Markets for $13.7 billion.
• January 2018: Amazon opens its first convenience store Amazon Go to the public.
• March 2018: Amazon acquires smart home and security company Ring for $1 billion.
• June 2018: Amazon acquires online pharmacy PillPack for $950 million, entering the online pharmacy industry.
• September 2018: Amazon opens its first Amazon 4-Star Store in NYC, selling popular and trending products sold on Amazon.com.
• June 2020: Amazon acquires autonomous driving technology company Zoox for $1.2 billion.
• September 2020: Amazon opens its first physical Amazon Fresh grocery store in Los Angeles.
• September 2020: Amazon launches its subscription gaming service and hardware, Amazon Luna.
• May 2022: Amazon acquires TV and film producer MGM Studios for $8.5 billion.
• July 2022: Amazon acquires primary care clinic network One Medical for $3.9 billion.
• August 2022: Amazon acquires consumer robotics company iRobot for $1.7 billion.

Amazon has a diversified business model, operating across several major industries. What started out as an online bookstore has evolved into a multinational ecommerce and technology company that has created an entire ecosystem around its platform. In fact, one name for this type of business model is an ecosystem business model.

At the core of Amazon’s business model is leveraging economies of scale, technology, and logistics as competitive advantages. This has led Amazon to venture further into its value chain, beginning in areas like seller services and cloud computing and expanding further and further into areas such as artificial intelligence, machine learning, and robotics.

So how did they get this way? By focusing on the company’s mission- creating value for its customers and everyone the company interacts with. 

From the beginning, Amazon’s mission has centered around creating value for its customers. In his first letter addressing shareholders in 1997, Jeff Bezos, Amazon’s founder and CEO, described the company’s mission is to build an “enduring franchise that would reinvent what it means to serve customers by unlocking the internet’s power.”

Current CEO Andy Jassy has taken the same approach - recognizing that creating value for your customers and everyone in your value chain is the way you succeed. In a virtual chat with employees shortly after taking the reins as CEO, Jassy explains, “Whether we’re talking about serving consumers or sellers or brand advertisers or developers or enterprises or governments, we have a really strong connective tissue in being Earth’s most customer-centric company.”

In an interview with Time magazine in March 2022, Jassy tells them, “We exist to make customers’ lives better, and we think about it as needing to relentlessly invent to make that so. When I arrived at Amazon in 1997, we sold books. But it was clear from the start that we had the opportunity to help customers accomplish a lot more than just finding and discovering great books. If there’s a customer experience that, if we fixed it, could be a large, meaningful business for the company, we will pursue it. Even if it has very little to do with our existing businesses.”

The truth is, even though Amazon continues to grow its ecommerce platform, ecommerce itself is expected to account for a little less than half of the company’s revenues in 2022.

To carry out its mission, Amazon has adopted a number of business strategies to make customers' lives better and provide value to not only them, but everyone within the company’s value chain. 

Amazon names 16 Leadership Principles that guide its decisions:

In analyzing Amazon’s Leadership Principles, a number of them stand out as influential in the business strategies that are key to Amazon’s enormous growth and success. 

Here are some of the key strategies that we believe helped make Amazon into the behemoth it is today:

Customer Obsession

One of the biggest reasons that Amazon has grown to be what it is today is that, from the beginning, they have made it a mission to pay attention to and listen to customers. They were, and still are, “customer-obsessed.” 

According to Bezos, “If you’re truly obsessed about your customers, it will cover a lot of your other mistakes.”

Jeff Bezos made it a regular habit to survey Amazon’s customers about what they needed, what products they would like to see Amazon sell, and their customer experience.

Amazon remains committed to customer obsession today. Before beginning any new venture, Amazon takes the time to view it from the perspective of the customer. Any time someone has an idea for a new project, they have to put pen to (imaginary) paper and write a press release touting the advantages of the product they have in mind.

Then, after that, they will go out and ask their customers or target customers. Amazon is obsessed with its customers, and they want to create and sell the products and services that bring the most value to its customers’ lives.

And, when it comes to decision time, Amazon ensures that its customers remain front and center in the minds of its executives by placing a symbolic chair in each of the company's boardrooms to represent the customer.

A Focus on Customer Wants and Needs

One of the most important components of Amazon’s business strategy is the company’s focus on meeting its customers' wants and needs. According to Bezos, “Customers want low prices … They want fast delivery; they want vast selection.”

Amazon delivers on this by listening to its customers and letting them know this through its marketing mix and messaging. They do this by:

• Offering the Largest Selection of Products. Known as The Everything Store, Amazon offers the largest selection of products of any retailer in the world, with more than 12 million Amazon products and more than 350 million products on the Amazon Marketplace.
• Developing a Customer-Friendly Platform. Amazon makes it easy for customers to navigate, search, filter, and explore Amazon’s vast selection of products. One of the reasons for their advanced platform is Amazon’s continual push to optimize its user interfaces, integrating features like recent browsing history, order history, and recommendations.
• Providing Reliable, Fast Delivery. Another way Amazon has kept in front of customers’ wants and needs is reliable, fast delivery. Since 2005 when Amazon rolled out its Prime membership, Amazon has become known for its speedy delivery, with free two-day delivery on over 1 million items. And, in recent years, delivery has only gotten faster. Today, in many major markets, millions of items are available for delivery as soon as the same day.

Data, Data, Data

A third crucial component of Amazon’s marketing strategy is utilizing the massive amounts of data that Amazon gains from its customers. Amazon collects an enormous amount of data from its customers. They not only know what you look at and what you buy, but also collect data from your Amazon Prime and Music streaming preferences and even Alexa commands. 

Amazon then uses this massive amount of information to make most of its decisions. The company uses what they know about you to figure out your precise shopping habits, match them to niches of customers like you, and predict what you are going to buy next and when. They use this data to:

• Recommend products to you, promote their own products, and sell advertising. 
• Create dynamic pricing models that adapt to factors like consumer behavior on the site, product popularity, demand, supply, estimated profit margin, and more.
• Develop and improve products and services to better serve their customers' wants and needs.

Investing in Innovation and Technologies

Another key strategy at Amazon is investing in innovation and technology and fostering an inventive culture. This is one of Amazon’s keys to sustained success- innovating in ways that benefit and serve their customers. 

Since its inception, Amazon has been inventing away. Willing to take risks, be patient, and bet on the future. Amazon’s inventive culture is a big part of where the company is where it is today. From the beginning, Bezos believed in fostering innovation, understanding that “If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table.” 

Today, Amazon isn’t just a powerhouse innovating in the ecommerce sector but is making waves in areas like logistics, streaming media, video games, power management, artificial intelligence (AI), web services, cloud computing, machine learning (ML), autonomous vehicles, and robotics. 

In fact, Amazon has more than 24,355 patents worldwide across 12,104 unique patent families, 21,137 of which are currently active. That’s a ton of patents covering a lot of different domains.

Mergers and Acquisitions

Another strategy that Amazon has successfully deployed is the use of mergers and acquisitions to fuel growth. Amazon made its first acquisitions shortly following its IPO with the acquisitions of IMDb, Telebook, and Bookpages in the spring of 1998. And it hasn’t slowed down since.

Over the years, Amazon has consistently relied on its acquisition strategy to grow its ecosystem business model. Through August 2022, Amazon has made 112 notable acquisitions. 

Some of Amazon’s most notable acquisitions include IMDb, Audible, Zappos, Kiva Systems, Whole Foods Market, Ring, Zoox, MGM Studios, One Medical, and iRobot.

Amazon doesn’t seem to have any plans to stop growing, as can be seen with its continuing investments in technology and acquisitions. And, with a mission of being the world’s most customer-centric company and creating value for everyone in their supply chain, the possibilities seem endless.

Looking at Amazon’s recent announcements and acquisitions provides a glimpse of where the company might have its eyes set. 

Amazon recently announced that it was moving into the testing phase of its Prime Air drone delivery, a project that Amazon has been working on since 2013. Prime Air delivery will allow Amazon to deliver lighter items to many Amazon customers via drone, right to their doorstep.

Amazon has also announced that it is developing a Tik-Tok like feature on Amazon.com called Spark. Spark allows Amazon sellers and shoppers to share short videos of themselves showcasing, purchasing, and unboxing products and marking Amazon’s foray into social media.

Since 2020, Amazon has also acquired companies in autonomous vehicles (Zoox), advertising (Wondery, Art19), 3D technology (Umbra 3D), software & web services (Wickr), inventory and fulfillment (Veeqo), AI-powered robotics (Strio.Ai), social selling (Glow Road), TV and film production (MGM Studios), healthcare (One Medical), and consumer electronics (iRobot).

While it is difficult to predict exactly what industry or market that Amazon will look to reinvent next, one thing we should expect is that Amazon will continue to work toward improving and growing its ecosystem.

You may not be as big as Amazon or even want to be, but there are a number of things you can learn from Amazon’s success, no matter what size your business is.

Knowing your customers is one of the most important first steps in building a successful business. It is key to understanding what your customers want and need and how you can deliver value to their lives. Knowing your customers is an integral part of the product development process, validating your startup idea, and finding product-market fit.

Amazon is famous for surveying its customers, but there are many ways that you can learn about and get to know your customers. You can find your target customers and reach out to them. Use resources like Facebook groups, forums, blogs, and other social feeds to see what people are talking about, complaining about, and sharing. 

And ask them questions. Conduct interviews and focus groups. Gather feedback. Determine what they really need, what their biggest pain points are, and how you can develop your new product to solve real customer problems.

Another thing you can learn from Amazon is the importance of focusing on creating value for your customers. From its earliest days, Amazon has been customer-obsessed, and it has been finding new ways to create value for its customers ever since.

When you create value for your customers, not only will their customer satisfaction increase but so will their confidence and trust in your company. Providing more value to customers (higher quality services at a fair price) can increase your customer’s perception of the customer experience and lead to higher retention, referrals, revenue, profit margins, and even productivity among your team.

Creating value for your customer’s is a continuous process. Not only are industries continuously evolving, but so are your customers' wants and needs.

There are a number of things you can do to build a more customer-focused company. It starts with listening to your customers and understanding their wants and needs. Next, your focus should be on solving these needs. 

It is important to remember that creating value for your customers doesn’t always relate to price. There are a number of areas where you might look to create additional value for your customers. Can you improve your product or service? Add a feature or benefit that your customers would find valuable? Improve your customer service? Your customer experience?

On top of knowing your customers, you also have to apply what you learn. One way this is done is to collect and leverage as much data as you can. Every touchpoint with a customer provides the ability to collect information that could help improve that part of the customer experience. 

It is important to remember that as much as you want to know everything about your customers, they value their privacy. Be aware of the information you collect, follow data privacy laws, and handle your customer information with care. 

With that being said, there are a number of things you want to know and should be collecting from your customers. These include:

• Email Addresses (the least invasive form of data you can request)
• Contact Information (name, mailing address, phone number)
• Transaction Records (order history, frequency of orders, age of accounts)
• Thoughts and Opinions (surveys, interviews, online feedback, etc.)

And second, leverage what you learn. Use what you know and learn about your customers to really understand who they are. Then, leverage this knowledge to inform product development, improvements, messaging and marketing, and the customer experience in order to better satisfy their wants and needs.

Being innovative doesn’t mean you need to develop a radical new idea. Innovation is what happens when you create additional value for your customers through small changes and improvements too. 

In order to be innovative, you may need to be bold and take risks. Don’t be afraid to try new things, even if they may fail. Experimentation is a huge part of Amazon’s strategies, but not all of the company’s products or services are successful. 

According to Bezos, “If you’re not stubborn, you’ll give up on experiments too soon. And if you’re not flexible, you’ll pound your head against the wall, and you won’t see a different solution to a problem you’re trying to solve.”